29/10/2019
In recent years, the US has seen a trend in large-scale litigation pushed forward by the plaintiffs’ bar in the form of class actions, which are often consolidated in state courts or take the form of multi-district litigation (MDL) in the federal court system.
The bundling of plaintiffs can present significant challenges for defendants and is being seen in claims including, but not limited to, sports-related head trauma, talc, sexual abuse, opioids, and cyber liability. A few of these areas are described briefly below.
Many states have recently changed their laws regarding the statute of limitations for sexual abuse claims. These changes are a reaction to the growing media attention surrounding cases of child sexual abuse. Many cases involve widespread abuse by members of organisations designed to assist children such as the Roman Catholic Church, USA Gymnastics, and the Boy Scouts of America.
Particularly notable is the Child Victims Act in New York state, which suspends the statute of limitations on child sex abuse claims for a one-year “look-back window,” allowing victims of any age a one-year period to file civil actions, regardless of when the abuse occurred. After the “window” closes, victims will have until the age of 55 to file lawsuits regarding their abuse.
Since becoming law in February 2019, the Act has led to a wave of civil lawsuits in New York, many of which involve alleged abuse that occurred in the 1960s through to the 1980s. Earlier this month, California enacted a similar law, AB 218, that provides for a look-back window of three years. This law is likely to spawn a similar wave of lawsuits in California.
Opioid Claims
Local governments, hospitals, and health insurers have filed well over 1,000 lawsuits in courts across the US against manufacturers, distributors, and retailers of opioids. These plaintiffs seek to recover millions of dollars spent to manage and combat the controlled substances epidemic, such as, for example, increased costs to support state-funded rehabilitation services or law enforcement and public safety measures related to the opioid epidemic.
Complaints in the opioid litigation typically allege intentional actions by the manufacturers, distributors, and retailers. They also allege that these entities have contributed to and substantially, illicitly, and tortuously benefited financially from the prescription drug abuse problem.
Plaintiffs allege that the manufacturers knew of the risks and dangers associated with their controlled substances in terms of their ability to be abused or have their time-release components bypassed or diverted but made misrepresentations about and failed to adequately warn the public and its users of those risks. Indeed, it is often alleged that the manufacturers aggressively advertised their controlled substances as safe for human use in all areas of pain relief.
The stakes in these cases are high. On August 26, 2019, one of the first verdicts in the opioid litigation was entered in the matter of State of Oklahoma, et al v Purdue Pharma LP, et al, No CJ-2017-816 (Cleveland County, OK), initially in the amount of $570,000,000. The largest ongoing opioid litigation is an MDL – In re National Prescription Opiate Litigation, 1:17-md-2804 (ND Ohio) where several MDL cases are scheduled to start trial this month. Additionally, a significant tentative settlement valued at more than $10bn was reached by Purdue, a major defendant in this arena. Then, on October 21, 2019, on the eve of the first federal court trial, two Ohio counties and four drug companies reached a $260m settlement.
Cyber Claims
Data breaches have become a rapidly evolving area of large-scale litigation in the US. Based on 2019 numbers, more than 5,810 data breaches have resulted in the exposure of more than 847 million records in recent years. Class action lawsuits have followed. Any entity that digitally stores personal information can be the subject of a data breach and an eventual lawsuit. As an example, Marriott International faced several lawsuits after a data breach affected its reservation system in 2018.
More recently, in the summer of 2019, CapitalOne became a defendant in a class action lawsuit resulting from a security breach and disclosure of personal information of more than 100 million customers.
Negligence and claims under the Fair Credit Reporting Act are the most common causes of action asserted in these data breach lawsuits. Most recently, private companies that contract with the federal government have been swept up in the data breach lawsuits in connection with alleged violations of heightened standards aimed at protecting federal data.
Data breach lawsuits are often defended by attacking a plaintiff’s standing. Courts have held that a data breach plaintiff’s inability to point to a current injury, but only suggest a future injury because of a data breach, deprives that plaintiff of a concrete injury sufficient to confer standing. In addition, data breach defendants have had some success in pointing to arbitration provisions in various consumer agreements to frustrate plaintiffs’ attempts at incepting large class actions.
These multi-plaintiff lawsuits present unique defence challenges. First, they can be confusing to juries. A small subset of plaintiffs may act as test cases for the rest of the plaintiffs. For juries hearing several cases at once, it is difficult to keep the facts straight. Second, the sheer number of cases filed, and the significant verdicts and settlements in these lawsuits garner media attention. This type of publicity can serve to encourage the filing of additional claims across the US. Third, a single outcome in favour of any plaintiff can be used by the plaintiffs’ bar as a basis to force inflated settlements.
Finally, developing global theories of defence is inherently difficult in situations involving thousands of claims with nuanced differences. What remains to be seen is whether this approach will continue to grow in other arenas or face backlash from the judiciary given the potential problems that it presents.
This article was first published by Insurance Day on 27 October 2019
Related item: New Jersey's amended statute of limitations for sex abuse claims expected to give rise to many suits and coverage implications
